Time to end the fuel additive mandate
On Aug. 6, nearly 10 months past due, the U.S. Environmental Protection Agency issued its 2013 Renewable Fuel Standards. The fuel additives ruling tells the nation's 143 refiners how much biofuel to blend into the gasoline supply.
For 2013, 16.5 billion gallons of biofuel must be added. Corn-based ethanol is the primary stock for now, making up 12.8 billion gallons.
By 2022, the Energy Independence and Security Act of 2007 requires that 36 billion gallons of biofuel be added, more than double today's amount. The amount of ethanol in the mix will cap at 15 billion gallons. The remainder is to be supplied by advanced biofuels, biomass-based diesel, and cellulosic biofuels.
The original intent of the Renewable Fuel Standard was to drive production of alternatives to gasoline that would decrease the nation's dependence on foreign oil and lower greenhouse gas emissions.
The act is yet another example of a well-intentioned law that ultimately does more harm than good.
The requirements keep ratcheting up even though U.S. gasoline use is falling, wrote Kimberley Strassel of the Wall Street Journal.
"Since the nation's automakers have declared they will void the warranties of cars using gas with more than 10 percent ethanol, refineries face lawsuits. Most have instead turned to buying federal renewable 'credits' to make up for the ethanol they don't blend."
Valero Energy has said the credits could raise its cost of producing gasoline by $750 million this year. PBF Energy said the $200 million cost of credits exceeds salaries and wages to operate its three refineries.
Strassel said some refiners are lowering production to mitigate costs, while others are exporting their gasoline to avoid the mandate.
Translation: the fuel standard increases the cost to refine gasoline and encourages refiners to lower production or increase exports, thereby reducing U.S. supplies and increasing the cost to consumers.
Meanwhile advances in shale drilling are reducing the country's reliance on foreign oil. And the law's effect on reducing greenhouse gases is in question.
The environmental group Friends of the Earth reports that several studies, including one from the National Academy of Sciences, have found that the RFS is actually increasing air pollution and greenhouse gases, degrading water sources, and damaging biodiversity.
Friends of Earth said the pending expansion of biofuels production "has the potential to poison our natural resources, strangle the amount of cropland dedicated to food, and increase global food insecurity."
For all of these reasons, Congress needs to repeal the Renewable Fuel Standard.